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I've attached a chart of DELL that shows the stock from July to the present.
You can see how some buyers might think they have a leg to stand on -- albeit
a very thin, shaky leg.
In a minute I'll send another note with an attached chart of DELL in October
and November of last year, when it plummeted. You can see the same precipitous
drop back then, and the 5-day variable moving average falling through the
11-day VMA, as it did yesterday. You can also see how the stock attempted to
rally then, rose back up to the 5-day VMA and then plummeted again. The 5- and
11-day variable moving averages are similar to the 9- and 21-day exponential
averages, btw.
The point is that you can see the danger signs this time around. The 5-day VMA
has just fallen through the 11-day VMA. Usually, that would be a signal to
sell, not to rush back in. Furthermore, parabolic SAR and the Bull/Bear system
remain negative.
This is not to rule out a sustained rally. It is to suggest, though, that
there might be an opportunity to short the stock near the 5-day VMA (or 9-day
VMA), or using another plot, near the red support line at 55.5. The emphasis
is on might. If the stock does attempt to rise above the 5-day VMA and fails,
that's all the more reason to consider shorting.
As for buying right now, it's dangerous. But whaddo I know?
Brooke
Attachment Converted: "c:\eudora\attach\DELL09.gif"
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